Possible midterm impacts due to Nearshoring effect in Mexico

By Gerardo Zambrano Escamilla

We had the opportunity to talk with Pedro Castillo, Managing Director of TTX Mexico and Subsidiaries, at his office in Sturgeon Bay, Wisconsin, where he shared his views on the nearshoring phenomenon that our country is experiencing.

The effect of nearshoring has been very positive for Mexico, the arrival of companies to the country to serve the domestic and American markets, derived from an intense promotion abroad, as well as the economic framework that has allowed this to be consolidated. The governments of the three orders of Government (counties, states and federal) have worked in a coordinated manner to receive investments, which has activated the economy.

However, it is important to be vigilant so as not to repeat mistakes from similar situations in the past.

“The nearshore is also accompanied by not so positive impacts, companies that seek to manufacture and replicate something already defined looking for the benefit of having a better cost, a better delivery time or some improvement outside the place of origin, which causes an entire workforce, engineering, specialization, legal, financial, to cover that need, but at the same time it can uncover research and development topics, issues that today generate added value and that have helped the country to get out of crises when they have happened,” Pedro Castillo commented. Universities’ focus on meeting this demand for talent can create gaps in other specialty areas.

Starting from previous experiences, such as the boom that took place in the first half of the 1990s, or at the end of the first decade of this millennium, it is where we can see the value of research and development, which have been fundamental in helping to emerge from crises more quickly.

“Mexico is a country of crisis, we have a specialty in entering and exiting crises, experience has taught us, which is why we must be cautious with the nearshoring phenomenon, to be prepared in case a whiplash comes again,” said the Managing Director of TTX Mexico and Subsidiaries.

Most of the solutions that come within this nearshoring boom are already well defined and established, there are few that come with innovative solutions that seek to breakthrough some scheme, but nearshore is also not something perfect, it must be taken into account that it always comes with an adaptation process, that is where also innovation plays a fundamental role and that is where it is important that Mexico raise its hand to lead this process and not remain passive waiting for foreigners to be the ones looking for the solutions.

“The nearshore is something very good, fantastic, the important thing is that it does not become the killer of innovation, which the country has tried to rescue for several cycles, as well as not neglecting and abandoning the research and development process, in order to fill the positions that come with this phenomenon,” the mechanical engineering graduate of the Instituto Tecnológico de Estudios Superiores de Monterrey pointed out to conclude.

More than having a pessimistic vision towards the future, it is important to learn from past experiences, to promote this phenomenon that is being experienced and maintain that balance.

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